Today I walked into a local Starbucks and was greeted by a prominently-placed offer for the new Starbucks Gold card. You probably know by now that I’m a Starbucks regular. But I’ll admit, I’ve spent a lot less time (and yes, money) in Starbucks locations in recent history.
A quick scan of my unread e-mail shows that they sent me something about this card a month ago. I missed that message. No big surprise, since e-mail has been a background process for me with a few minor exceptions in recent weeks.
Here’s the quick skinny on the card: $25 annual membership, 10% off (nearly) all purchases, sneak peeks and surprise offers via e-mail and postal mail. On top of that, you get a free drink (anything you can dream up) when you buy the card in-store, a free drink on your birthday (evidently an old-school card arrives snail-mail-style), and a very classy exclusive-looking card ensconced in a booklet with free “guest” offers you can give to friends. One added bonus: a gorgeous high-usability “private” website for members of the Starbucks card where you can manage your account and benefits, including up to 2 hours of free wi-fi at AT&T hotspots within company-owned stores.
Lessons for Businesses Working to Beat the Recession
The introduction of this loyalty program serves up a number of great takeaways for any business tackling the challenges in this economy. Here are a few:
Listen to Your Customers
Starbucks started by bringing back Howard Schultz, who is almost single-handedly responsible for creating the famous Starbucks experience. His first move? Start listening.
The company has engaged in any number of efforts to solicit and obtain feedback from its customer base to determine where it had missed the mark. The bottom line? It’s done a great job of listening.
Give a Little
Customers wanted free wi-fi (something the company had famously sworn off forever). The solution? It’s available for the company’s loyal customers only, and within reasonable limits. Others may continue to pay, thank you very much. Customers wanted free flavoring syrups and other little bonuses to help counteract the escalating prices of their addictions. Again: available for customers willing to use a prepaid rewards card.
These and other relatively low-cost accommodations will pay off handsomely for the company when given to those of its customers willing to give up a little bit of information (the rewards cards are certainly being tracked, more so when registered online).
Let Your Biggest Fans Self-Identify
Another important facet of this process is that those customers who felt snubbed as the company went through changes resulting from rapid growth were given an opportunity to identify themselves and sound off. The result? The company has elegantly reached out to them and strengthened its relationship with them. These are now the people who are receiving Starbucks’ most frequent e-mail communications. Remember: this is a very high ROI marketing medium.
Listening to your customers can be a risky business. Taken at face value, raw feedback and suggestions from customers — especially ones you may have injured — may not be directly actionable. They’ll ask for things you may not be capable of delivering. (And, your feelings may get hurt — especially if you’re a small business.)
Starbucks’ promotion belies a lot of intentional effort on their part to hear what was behind the complaints and the feedback they got. They worked to create a viable solution that capitalized on their own need to market to their customer base and to give where they were able to give while still delivering great value.
We all know it costs a lot less to keep existing customers happy than it does to acquire new ones. So, Starbucks used some of its marketing budget on discounts to loyal customers.
At the same time, charging a $25 annual fee for the Gold card created a great income stream while filtering out customers who don’t spend enough in the stores to justify the purchase. For me, between my occasional cappuccinos, the beans I go out of my way to purchase for my home brewing setup (burr grinder & french press), occasional entertaining at Starbucks locations, and the days like today where I want someplace different to work, the purchase was a no-brainer. It will pay for itself in short order.
Can you find creative ways to reward your loyal customers? Absolutely. And in times like these when your customers are vulnerable to being picked off by low-priced competition or by other economic factors, now’s the time to nurture those relationships like never before. But do yourself a favor: start by asking what they want and need. Customers who feel neglected are the first ones to go.
Personally, I’m feeling a bit less neglected by Starbucks. Now if only they’d bring back the almond syrup.
Now It’s Your Turn
What creative ideas have you seen (or used!) to reward loyal customers on a budget?
Use the comment box below to sound off!